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Four Investing Tips

Asset classes. Diversification. Index Funds. Bonds. Dollar cost averaging. There are lots of terms and ideas associated with investing. It can be dizzying and overwhelming, so remember some of the key points from today's show:

Choose passive investing over active investing: Choose an index fund. That's the advice from Justin Fox, the author of the Myth of the Rational Market. "If you are just starting out and you don't know where to go," Fox says, "You gotta start out with index funds." An index-fund gives an you the opportunity to invest in a collection of stocks or bonds that mirror a particular market index or reflect a certain sector. It's a cheaper way to invest your money.

Watch out for fees: That's true too, Fox says with index funds. "[Index funds] should be super super cheap," Fox explains. "And they should be charging you a much lower percentage. It should be way lower than a percent for the most part per year to manage your money." There are numerous ways to check out the fees with investment vehicles. You can call the company and ask for the fee printout, you can type the fund's name into a web search engine, or there are websites that help calculate how much of your investment fees will eat away at.

Stay diversified: It's the long term play that matters. The market can fluctuate minute-by-minute, it can change directions daily and monthly. For instance, interest rates are going up. Does that mean you should dump bonds? Jill Schlesinger warns about leaving asset classes behind. "I'm not a fan of getting out of asset classes completely," she explains. "So I'm not a fan of saying dump every single bond you own."

Be patient: This thought comes from our Facebook friend, Paul: "Stop trying to time the market." You run the risk of buying high and selling low. Investing, in a lot of ways, is about the long term.